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India's Liquefied Natural Gas (LNG) demand remains firm despite high spot prices, but rising gas costs could squeeze margins for downstream players; the country may see higher LNG prices from September, according to a report by Equirus.
India's LNG imports accounted for 59 per cent of total gas consumption in July 2026, the highest share since July 2021, when it stood at 65 per cent. The share has also risen by 15 percentage points from 44 per cent in April 2026 -- at the height of the war-related trough. With domestic gas production remaining flat, "India remains highly exposed to elevated spot LNG prices," Equirus noted. Globally, the LNG exports outside the Middle East were expected to rise by around 40 mt year-on-year in 2026, driven by new and ramping-up projects, particularly in the US. As per Equirus, under Shell's early-third-quarter resolution scenario, a decline of around 45 mt in Middle Eastern exports would more than offset this growth, resulting in a net contraction of about 5 mt in global LNG exports. Further, Middle Eastern flows are yet to normalise, hence, the window for such an early-resolution scenario has effectively closed, which has further shifted the outlook towards a year-long disruption. According to the report, "A year-long disruption would overwhelm new LNG supply wave," thus, Middle Eastern exports may decline by more than 65 mt, compared with only around 40 mt of incremental supply from the rest of the world. In this scenario, global LNG trade may contract by roughly 27 mt, representing a deterioration of about 22 mt from the early-resolution case. As a result, the anticipated easing in supply conditions could be delayed until 2027, despite additional capacity coming online in North America, Equirus noted. Furthermore, a prolonged disruption would eventually intensify the competition between Europe and Asia for flexible US LNG, which may lead to elevated spot prices through winter. For India, "recent gas consumption and import data indicate that LNG demand has remained resilient even at spot prices >$20/mmbtu," Equirus noted adding, near-term adjustment may likely to occur through higher gas costs and margin compression across downstream players, "rather than an immediate sharp decline in volumes." (ANI)
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